You might have thought that protecting intellectual property (IP) was just important to big companies. That’s a fallacy. IP protection for small businesses is a big concern.
According to the U.S. Small Business Administration, in 2020, small businesses made up 99.9 percent of U.S. companies (37.1 million) and employed 47.1 percent of the workforce (60.6 million). Firms with fewer than 20 workers employed 20 million U.S. professionals. And many of these companies create some very valuable IP. From proprietary furniture designs to software code to the invention of new processes that improve medical outcomes to new devices to streamline manufacturing—the list is virtually endless.
While large organizations staff entire departments with patent lawyers and other intellectual property specialists, IP protection for small businesses typically lacks resources. That leaves IP at risk of being stolen, copied, or exploited by competitors.
“When we talk about intellectual property protection,” said Steve Francis, director of the Intellectual Property Rights Coordination Center, “too often the focus is solely on large companies that have dedicated personnel and resources protecting their brand.” Francis’ comments came in a press release from the U.S. Department of Homeland Security. The federal government announced IP Protect in April 2021—a program to specifically help with IP protection for small businesses. The available resources are free. “Start-ups and small to mid-size businesses typically lack those resources or expertise. This leaves them particularly vulnerable to IP theft, cyber intrusion, and fraud,” said Francis. IP Protect helps them.
What is IP protection?
Legal methods of protecting your IP rights have been designed to prevent other people or companies from copying your ideas or inventions.
IP rights create a protective bubble around private, intangible assets. This bubble makes it possible to enter transactions involving such assets without risk. You can license your ideas or inventions, sell them, or trade them. Without IP protection for small businesses, companies putting money into R&D to invent new products or processes are vulnerable. They could lose their investments if others take advantage of the IP they produce without compensating them for it.
Large organizations, university research labs, and commercial scientific teams have made applying for patents and other protections part of their DNA. Small businesses frequently don’t bother because the paperwork and hassle may seem like too much work. And that’s a mistake.
Why protect your IP?
In ignoring IP protections, small businesses are missing a significant opportunity. IP protections can increase their revenues and their overall value by protecting the work they’re already doing.
A 2021 study found that although fewer than nine percent of European small businesses protect their IP, these firms generate 68 percent higher revenues per employee than companies that don’t. Small businesses that make IP an integral part of their business model and own multiple patents, trademarks, and designs, are 33 percent more likely to become high-growth firms in the future.
You must also re-evaluate your IP situation constantly. What are you producing now that you should be protecting? Not registering your IT rights opens a way for your competitors to steal your differentiated technologies and processes.
How do you secure your IP rights?
You should take three steps to prepare to protect your IP.
1. Know your intangible assets. Go through everything you have produced as a business. Your website, logos, slogans. Device prototypes. Process inventions. Or software code for apps you have written. That is all IP that needs to be protected.
2. Identify the kind of IP rights that will protect them. The four most common IP protection mechanisms are patents, trademarks, trade secrets, and copyrights.
- Patent: A right granted by a government to inventors for a certain number of years to exclude others from making, using, or selling the patented product or using the patented method or process. After the patent expires, the IP enters the public domain, where anyone can use it.
- Trademark: A word, name, symbol, or device used to distinguish what you are selling from the goods or services of others.
- Trade secret: A formula, method, or technique that possesses financial value because it’s not available to or known by others.
- Copyright: Anything created with words, including content for your website, or other creative assets such as photos or images, even code for software your organization has developed.
3. Combine different legal strategies to achieve robust protection. You might not need a patent right away. A trademark might do. But you may want to try and add a patent later for maximum protection. All of this depends on your long-term strategy for using your IP in your business. Some key considerations include whether you’ll be licensing it to others, keeping it to yourself, or using it to attract venture capital as investments for growth.
Seek expert help
Securing IP protection is not a DIY project. First, you might not be able to identify which parts of your inventions are “novel.” This is an essential aspect of successful patent, trademark, or trade-secret applications. You also might not understand all the ways your IP could be used. This is critical when choosing the language of the patent application. Or you might simply be discouraged by all the paperwork. The vast majority of self-filers (92 percent) are unsuccessful in navigating the complex journey of obtaining patent, trademark, and design rights. Go to an experienced IP lawyer—there are many around—and make sure to do your due diligence before settling on one. Ask for success rates, a list of patents they’ve successfully filed in your particular area, and, most importantly, references.
Put together an IP strategy
Merely registering your IP is not enough. Small businesses need to develop strategies based on their long-term business goals to extract the most value from their IP.
Large firms have entire IP teams that contribute to marketing discussions, R&D plans, engineering design, and keeping up on the latest patents in the firm’s specialty area. Obviously, small businesses don’t have these kinds of capabilities or resources. You can consult with experts, get advice, and put together a strategic roadmap that allows you to register IP when the time is right.
A good IP strategy will consider your business’ present needs and how to protect your investments and inventions as you grow. By putting a simple framework in place to identify IP during its creation, to capture it, and protect it at the right time, you can put your small business on a path to bigger and brighter things.